Convertible Note & Cap Table Math Guide for Ohio

What this calculator does

Run this scenario in DocketMath using the Convertible Note Cap Table calculator.

DocketMath’s Convertible Note & Cap Table Math Guide for Ohio tool (calculator slug: convertible-note-cap-table) is built to help you model what happens when a convertible promissory note turns into equity—specifically, how the conversion affects your cap table.

You’ll use it to compute outcomes like:

• Conversion price under a valuation cap (and optionally a discount)
• New share issuance on conversion
• Ownership percentages after conversion
• Pre-money vs. post-money ownership shifts based on your inputs

Because this is a cap-table math tool, it’s about mechanics and scenarios, not legal strategy. You should treat the results as a modeling aid and verify agreement terms against your note and any related documents.

Primary CTA: /tools/convertible-note-cap-table

When to use it

Use DocketMath when you need reliable numbers for a conversion event, such as:

• You’re preparing for an investor conversion following a triggering event (for example, a priced equity round)
• Your team is reconciling what changed in the cap table after issuing multiple notes
• You’re answering “what happens if we convert at cap vs. discount?” with a repeatable approach
• You’re modeling downstream effects: option pool sizing, dilution from new issuances, and ownership percentages

Ohio timeline context (general statute)

Some users also want a quick legal-timeline check alongside the equity math. If you’re calculating deadlines for actions tied to payment/contract enforcement, Ohio’s general limitations period is often referenced.

Ohio Rev. Code § 2901.13 sets the general statute of limitations for many claims. The provided jurisdiction data indicates:

• General SOL Period: 0.5 years
• General Statute: Ohio Rev. Code § 2901.13
• No claim-type-specific sub-rule was found in the supplied notes—so the “0.5 years” figure should be treated as the general/default period for this guide, not a claim-specific determination.

Source: https://codes.ohio.gov/assets/laws/revised-code/authenticated/29/2901/2901.13/7-16-2015/2901.13-7-16-2015.pdf

Step-by-step example

Below is a concrete conversion model you can mirror in DocketMath. The goal is to show how each input changes the cap table output.

Example assumptions (convertible note with a valuation cap)

Imagine you have:

• Company pre-conversion:

  • Existing shares outstanding: 4,000,000
• Convertible note:

  • Note principal: $1,000,000
  • Valuation cap: $6,000,000
  • Discount: 20% (optional in many notes; included here for demonstration)
  • Conversion occurs in connection with a financing with a priced round pre-money valuation: $8,000,000
  • Investor gets an equity stake based on the lower of:

    • The price implied by the priced round valuation (often called the “discounted” route), or
    • The price implied by the valuation cap (the “cap” route)

Step 1: Determine the effective conversion valuation

In many discount/cap structures, you compare the cap-based conversion price to the discount-based conversion price and use the “more favorable” for the noteholder (i.e., typically the lower conversion price / higher number of shares).

For modeling, we use this simplified approach:

1. Cap route effective valuation:

   • Cap: $6,000,000
2. Discount route effective valuation:

   • Priced round pre-money: $8,000,000
   • Discount: 20% → effectively 80% of $8,000,000 = $6,400,000

Effective valuation is typically the lower valuation between cap route and discount route:

• Lower of $6,000,000 vs. $6,400,000 = $6,000,000 (cap is more favorable)

Step 2: Convert principal into shares

To compute shares, you need an implied share price. A standard modeling convention is:

• Conversion share price = (Effective conversion valuation) / (Fully diluted shares denominator, depending on the agreement)

In simplified guides, we often start with existing shares outstanding as the denominator, unless your note specifies “fully diluted” including options/other converts.

For this walkthrough, assume:

• Denominator = 4,000,000 shares pre-conversion

So:

• Conversion price ≈ $6,000,000 / 4,000,000 = $1.50 per share
• Shares issued on conversion ≈ $1,000,000 / $1.50 = 666,666.67 shares
• For cap tables, you usually round to whole shares (the agreement may specify rounding rules)

  • Rounded shares issued: 666,667

Step 3: Update the cap table

Post-conversion shares:

• Existing shares: 4,000,000
• New note shares: 666,667
• Total post-conversion shares: 4,666,667

Ownership percentage:

• Noteholder ownership ≈ 666,667 / 4,666,667 = 14.29%
• Existing holders ownership ≈ 4,000,000 / 4,666,667 = 85.71%

Step 4: Repeat with different outcomes

Now change one input (like the priced round valuation) and see how the output changes:

• If the priced round pre-money were $5,500,000, the discount route valuation becomes $4,400,000 (80% of $5,500,000), which is lower than the $6,000,000 cap.
• In that case, the tool would generally model more shares because the note converts at a more favorable (lower) effective conversion price.

Common scenarios

Convertible notes tend to cluster into recurring fact patterns. DocketMath is most useful when you can map your note’s terms to these scenarios and model them consistently.

1) Valuation cap only (no discount)

Typical result:

• Conversion is determined primarily by the cap.
• The priced round valuation affects results only indirectly, depending on how the agreement defines the conversion formula.

What to model:

• Cap valuation
• Note principal
• Denominator assumptions (existing vs. fully diluted)

2) Discount only (no valuation cap)

Typical result:

• Conversion is driven by the priced round valuation.
• Lower priced rounds usually lead to lower conversion prices and more shares.

What to model:

• Priced round pre-money valuation (the input that “sets” the per-share reference)
• Discount percentage

3) Cap + discount

Most common modeling use case:

• You compare cap route vs. discount route and take the more favorable option (often the lower conversion price / higher number of shares).

What to model:

• Both cap and discount
• Priced round pre-money valuation
• Rounding rules (if the tool offers them)

4) Multiple convertible notes

Cap table math gets tricky fast when more than one note converts.

Use the tool to:

• Convert notes one at a time (or in batch if supported by the interface)
• Track dilution compounding
• Confirm the denominator method is consistent across conversions

5) Interest included in conversion amount

Some notes convert principal only; others convert principal + accrued interest (sometimes with interest capitalization rules).

Model it explicitly:

• Interest rate
• Accrual period (or conversion date)
• Whether the note specifies interest is included at conversion

Quick reference: inputs that usually drive outputs

Tips for accuracy

To get dependable numbers from DocketMath, tighten these areas before you trust outputs in a deck, an investor email, or board materials.

• Conversion price formula
• Whether conversion is based on pre-money, post-money, or a specified per-share basis
• Existing shares only vs. fully diluted shares (options, warrants, other converts)
• Whole-share rounding can move ownership by tenths of a percent when share counts are tight
• If interest is excluded from conversion amount, don’t add it to principal

Related reading

• Inputs you need for convertible note cap table math in United States (Federal) — Input checklist with sourcing guidance
• Worked example: convertible note cap table math in North Carolina — Worked example with real statute citations
• Convertible note cap table math in New Hampshire — Full how-to guide with jurisdiction-specific rules